Mitt Romney got the crowd’s attention during a recent campaign stop in Defiance, Ohio, when he announced that Chrysler, a major local employer, would move its Jeep auto production to China. Boos rang out.

Romney must have figured he’s on to something. He has flooded Ohio with TV and radio spots that say Chrysler and GM, which both received government assistance to survive, are now moving jobs to China. “Obama took GM and Chrysler into bankruptcy and sold Chrysler to Italians who are going to build Jeeps in China,” one spot says.

Turns out, the companies aren’t moving U.S. jobs to China. Chrysler and its Italian owner, Fiat S.p.A., are in talks to build a Jeep assembly plant in China to serve growing demand there. It’s not as if jobs would be shipped from Toledo to Beijing, and cars shipped back to Ohio. On the contrary, the planned expansion is a sign of renewed strength among domestic automakers that were on the verge of liquidation only a few years ago.

A GM spokesman labeled the ads “cynical campaign politics at its worst.”

Romney sees an opportunity to run against President Barack Obama and Chinese Premier Wen Jiabao, not Obama-Biden.

In the final presidential debate, Romney promised that on his first day as president, he would declare China a “currency manipulator.” That would find some Democratic and Republican support in Congress, where frustration with China runs high. But it would also risk a trade war that could close a big market for U.S. goods and hike prices on many goods we buy from China.

Last year, the U.S. imported $411 billion worth of goods and services from China. What’s often forgotten is that China bought $129 billion in goods and services from the U.S., everything from electrical generators and commercial aircraft to Illinois soybeans. China is the third largest market for American goods.

“China and the U.S. need each other desperately,” Caterpillar Chief Executive Doug Oberhelman recently said in a speech to the Economic Club of Chicago. Oberhelman, a Romney supporter, voiced deep concerns about campaign China-bashing.

The Peoria-based equipment maker is a net exporter of goods from its U.S. factories to China. Almost two-thirds of its sales go outside North America.

Obama the candidate has done his own share of China-bashing ― and has rapped Romney for investing in companies that expanded operations there.

As president, though, his approach to China has been carefully aggressive.

Obama, like his predecessor George W. Bush, has resisted calls that the U.S. designate China as a currency manipulator.

Obama has brought several trade complaints against China to the World Trade Organization. The most recent complaint, made in September, charges that China illegally subsidizes sales of cars and auto parts.

There is plenty to complain about how China trades with the world.

China keeps its currency at below-market rates to promote its export sales, though its currency has appreciated in recent years under steady U.S. diplomatic pressure.

The theft of intellectual property in China is a severe problem. Trade barriers in China’s domestic market make it impossible for foreign companies to compete against entrenched, government-affiliated local rivals.

China’s economy is slowing. It is wrestling with increasing demands from a populace eager to improve its living standards, and frustrated that the fruits of economic growth have been shared unevenly. China recently provoked a dispute with Japan over territorial claims to a group of islands, which led to violent protests against Japanese businesses in China. Business between the two nations has been disrupted, at substantial economic cost to both.

It’s easy to understand the white-hot campaign rhetoric aimed at China, in an election that will largely turn on the prospects for a U.S. economy that has struggled with job growth. But it’s important to recognize there would be casualties here if a trade war prompted China to slap high tariffs on U.S. goods and turn away from the market for U.S. Treasury securities.

Two days after our election, the Chinese initiate their once-a-decade change of power. Once the transition is settled, the new regime might well be willing to push some reset buttons with the U.S. It’s not time for a trade war that could further the risk that both nations slip into recession.

(The Chicago Tribune)
(MCT Information Services)